What’s going on here?

China denied violating its new trade agreement with the US – and pointed the finger at America for stirring up trouble, instead.

What does this mean?

On Friday, the US president accused China of breaching the two countries’ recent trade truce. He essentially claimed that China’s taking its sweet time to loosen export rules around key minerals, despite pledging to speed up the process. China snapped back on Monday, both denying breaching the agreement and accusing the States of imposing “discriminatory and restrictive measures”. Stocks in Hong Kong and Japan fell after the tit-for-tat spat, leaving investors waiting on tenterhooks for the next update. The countries’ presidents are expected to speak “very soon”, according to a White House official, in a potential one-on-one aimed at salvaging the fragile deal.

Why should I care?

Zooming in: We didn’t need you anyway.

Determined to remain the world’s tech capital, the US is keeping its smartest semiconductors to itself. So far, China’s contenders – like Alibaba, Tencent, and Baidu – have made do with the likes of Nvidia’s second-rate chips. But those firms are ramping up trials of locally made ones, too, with Huawei’s Ascend line currently a popular pick. This is a risky little game for the States: the longer China has to explore alternatives, the more likely it is to develop a solution to replace US-made semiconductors entirely.

The bigger picture: The S&P 500 doesn’t watch the news...

America’s key stock market index, the S&P 500, picked up by 6.2% in May – its strongest month since November 2023. See, despite all of this on-again, off-again tariff tension, S&P 500 companies managed to make over 13% more profit last quarter than the same time last year. They might struggle to keep it up, though: analysts have reduced their forecasts for eleven different sectors this quarter, and by a fair chunk too.

What’s going on here?

The US factory sector slowed down in May, making it tougher for America to crank more growth out of its assembly line.

What does this mean?

The “ISM Manufacturing Purchasing Managers’ Index” is a bit of a mouthful. But put simply, it’s a survey that measures activity levels in the manufacturing industry. And according to its latest reading, there were more than a few feet resting on desks last month. May’s figure came in at 48.5 – that’s below the 50 threshold that separates expansion from contraction, marking the third straight month of shrinkage.

Why should I care?

Zooming out: “You are going to see a crack in the bond market” – Jamie Dimon.

American businesses and consumers could both use a leg up right now, in the form of interest rate cuts to make loans cheaper. Yet, long-term interest rates – reflected in the yields of government bonds – are inching higher. That’s because traders are becoming increasingly worried about America’s mounting pile of debt, and the government’s ability to keep up with payments. This kind of situation – where long-term bond yields are high – usually bolsters the US dollar, at least. But this time, no dice. The greenback has fallen 9% against a bundle of different currencies this year – a trend that analysts expect to continue.

For you personally: Rates bite.

Higher interest rates are a bigger threat for companies with a lot of debt – especially smaller ones. They make payments more expensive, eating into cash those companies could otherwise use to better their businesses. (Or, in some cases, pushing them into the red.) And rising rates aren’t ideal for homeowners, either. Long-term bond yields, specifically, act as a benchmark for home loan interest rates. And at the end of May, the average rate for a 30-year fixed mortgage was 6.9% – the highest in nearly four months.